eBay sues Craigslist as family squabble goes public

eBay has taken a family squabble with eBay public and it could get messy.

In a lawsuit filed Tuesday in the Court of Chancery of the State of Delaware, the online auction house sued Craigslist, the online provider of classified ads for hookers, used toasters and room-mates that is 28.4 per cent owned by eBay. eBay claims that Craigslist's board of directors, which consists of founder Craig Newmark and CEO Jim Buckmaster, has taken unilateral and illegal actions to unfairly dilute that stake.

"Since negotiating our investment with Craigslist's board in 2004, we have acted openly and in good faith as a minority shareholder, so we were surprised by these recent unilateral actions," eBay General Counsel Mike Jacobson said here. "We are asking the Delaware court to rescind these recent actions in order to protect eBay's stockholders and preserve our investment."

The dealings between the two were so open, apparently, that the lawsuit was filed before eBay even bothered to broach the issue with Craigslist, according to a response headlined Tainted Love.

"We are surprised and very disappointed by eBay's unfounded allegations, which came to us out of the blue, without any attempt to engage in a dialogue with us," it states. "We have always done our best to protect the well-being of Craigslist and the Craigslist community, and will continue to do so. eBay has absolutely no reason to feel threatened — unless a hostile takeover of Craigslist, or the sale of eBay's stake in Craigslist to an unfriendly party, is their ultimate goal. (In which case, they’re out of luck!)"

eBay, which acquired the stake from a former Craigslist executive in 2004, said it filed the complaint under seal because it includes details protected by confidentiality requirements. Delaware's Court of Chancery, is a popular forum for settling internal disputes among companies registered in that state. ®